Emirates NBD Research
 

Find anything about our articles and more.
Enter a query in the search input above, and results will be displayed as you type.

Try typing "Dubai Economics", "Dubai GDP", "GCC Macro"

Emirates NBD
Search
Subscribe
   
  • Home
  • Economics

    Emirates NBD Research provides detailed coverage of 16 GCC and MENA economies, analysing them from a top down macro and strategic perspective as well as by a bottom up sector by sector approach.

    • SUBTOPICS
    • GCC Macro
    • MENA Macro
    • Global Macro
    • Sector Economics
    • Monthly Insights

     

    Latest Article Dubai PMI: Higher input costs squeeze margins in March
    Latest Article Lebanon outlook
    Latest Article Economic Calendar 29 March

     

  • Markets

    Emirates NBD Research publishes reports on global forex, rates and commodities, as well as regional fixed income and equity markets.

    • SUBTOPICS
    • Foreign Exchange
    • Fixed Income
    • Commodities
    • Equities
    • Monthly Insights

     

    Latest Article Metals markets to benefit from vaccines and stimulus
    Latest Article OPEC surprises again
    Latest Article OPEC to stick to lower output levels

     

  • Daily
  • PMIs

    Emirates NBD sponsors Purchasing Managers’ Indices for the UAE, Saudi Arabia, Egypt and Dubai. The indices are compiled by IHS Markit, the leading global provider of financial market data.

    • SUBTOPICS
    • UAE PMI
    • Saudi Arabia PMI
    • Egypt PMI
    • Dubai PMI
    • Methodology

     

    Latest Article Dubai PMI: Higher input costs squeeze margins in March
    Latest Article UAE PMI improves in March, but global supply constraints are raising input costs
    Latest Article Dubai PMI rose in February

     

  • About Us
  • EmiratesNBD.com
  • Subscribe
FIXED INCOME > MARKETS

Gold wobbles as US yields pick up

Edward Bell - Senior Director, Market Economics
Published Date: 12 August 2020

Facebook
Linkedin
Twitter
Email
Print

 

Gold prices have sold off sharply over the last few trading sessions, falling from a record level of USD 2,075/troy oz in early August to USD 1,863/troy oz in early trade today. Prices have managed to recover some ground but at around USD 1,930/troy oz remain around 7% below their peak levels.

The immediate catalyst for the sell-off in gold appears to be the uptick in UST yields. Yields on 10yr UST have gained over 10bps since the start of the week, trading at around 0.67% at present. Inflation adjusted yields have also moved higher, gaining around 10bps from their recent trough level of -1.08% to test -0.99% currently. The uptick in US producer price inflation for July, up 0.6% m/m, also should help to alleviate some near-term deflationary fears.

Gold, silver and UST 10yr yield 1mth performance

Source: Bloomberg, Emirates NBD Research. Note: Jul 13 2020 = 100.

Both gold and UST markets will be anxiously watching the outcome of political debates between the Trump administration, Senate Republicans and House Democrats in the US as to whether a new fiscal support package can be achieved. So far the divisions remain wide—at least by around USD 1trn!—but given the political cost for either side of not reaching a deal some new fiscal plan is likely to emerge. We would expect a deal to help push the UST yields higher—our range for UST 10yr in Q3 is 0.55-0.65% and then moving to 0.65-0.85% in Q4—and also sap momentum away from gold prices. We maintain our forecast for gold at USD 1,790/troy oz on average in Q3 and Q4.

Silver prices have also come under considerable pressure in line with the move downward in gold and likely have further room to fall. Over the past month spot silver rallied from USD 18.93/troy oz to USD 29.86, a gain of 57%. Prices have fallen around 16% from their early August peak and given silver’s high beta to move in gold, a fiscal deal or further gains in UST yields could play out more aggressively in the silver market. We expect prices at an average of around USD 17/troy oz in Q3 and Q4 2020.

Written By:
Edward Bell, Senior Director, Market Economics

RELATED ARTICLES

Emerging markets at risk of higher US yields
22.02.2021

US yields race ahead
22.02.2021

Inflation and the Fed
28.01.2021

Gold prices stumble to start 2021
11.01.2021

Joe Biden wins presidential election
08.11.2020

See all

LATEST ARTICLES

Dubai PMI: Higher input costs squeeze margins in March
11.04.2021

Lebanon outlook
08.04.2021

Morocco outlook
08.04.2021

See all
 

 Subscribe to our newsletter


Never miss out what is going on in UAE Economics

KEEP READING MORE

Dubai PMI slips to 49.9 in October

Business optimism at series low of 50.6.

PMIS, ECONOMICS - 09.11.2020

WFH adoption will pose challenges to policymakers

The Covid-19 crisis has accelerated the transition to more remote patterns of working, which poses fundamental questions regarding not only how we will work in future, but equally how we will live.

ECONOMICS, GLOBAL MACRO - 11.03.2021

CBE keeps rates on hold

The Central Bank of Egypt kept its benchmark rates steady at its March 18 MPC meeting, the third consecutive hold.

ECONOMICS, EGYPT - 21.03.2021

 

OPEC and allies to keep oil market hot

We now expect oil balances to be tighter and prices to be higher

MARKETS, COMMODITIES - 07.03.2021

GCC budget deficits to remain substantial even as economic outlook improves

Oil price will remain below GCC budget break evens in 2021 and sovereigns will need to issue more debt to finance budget shortfalls.

ECONOMICS, GCC MACRO - 17.02.2021

CBE keeps rates on hold

The Central Bank of Egypt kept its benchmark overnight deposit rate on hold at 8.25% at its February 4 meeting.

ECONOMICS, EGYPT - 07.02.2021

UAE: A mixed bag of data in January

The data released this month supports our view of a 6.9 percent contraction in 2020, but there is reason for optimism.

ECONOMICS, GCC MACRO - 21.01.2021

  • Economics
  • Markets
  • PMIs
  • About Us
  • Subscribe to our publications
  • Economics
  • GCC Macro
  • MENA Macro
  • Global Macro
  • Sector Economics
  • Markets
  • Foreign Exchange
  • Fixed Income
  • Commodities
  • Equities
  • PMIs
  • UAE PMI
  • Saudi Arabia PMI
  • Egypt PMI
  • Dubai Economy Tracker
  • Methodology
  • About Us
  • Subscribe to our publications

 


Terms and Conditions
Copyright © 2021 Emirates NBD Bank PJSC. All Rights Reserved